You should not close unused credit cards, unless they charge expensive annual fees, because good information continues to be reported to credit bureaus as long as the accounts are open, even if you don’t use the cards. Keeping unused credit cards open will also help preserve the length of your credit history, and the unused credit limits on the cards will contribute to your total available credit. These factors are used by credit-scoring models to calculate your credit score, which is why closing an unused credit card - or any credit card in good standing, for that matter – may hurt your credit, especially if it’s one of your oldest credit accounts or if it has a high credit limit.
With that being said, you can see exactly how closing an unused credit card is likely to affect your credit score by using WalletHub’s free credit score simulator.
Furthermore, despite the potential for credit-score damage, it’s important to remember that there a few situations in which it might be better to close unused credit cards rather than leave them open. If your unused credit card charges an annual fee, for example, and you don’t need your credit score in its best shape for a while, it’s probably best to save the annual fee and close the account. On the other hand, if you want to cancel your credit card because you are concerned about overspending, try locking it away in a safe place first. If that doesn’t work, it will likely work out better for you - and your financial future - to close the credit card, even if your credit score takes a hit.
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